Proton brand to reposition... again

Local Proton MD John Startari must feel like a passenger in a car crash. He's watching events unfold — from afar — and there's very little he can do about it.

Just this morning came the news that Group Managing Director of Proton Holdings, rejoicing in the name of Dato’ Sri Haji Syed Zainal Abidin Syed Mohamed Tahir, has resigned. Maybe he got sick of signing the cheques. It's just the latest sub-plot in the on-going drama unfolding within the walls of Proton.

Malaysian journalists who spoke with motoring.com.au during the local launch of the Kia Optima last year alleged that corrupt business practices by management at Proton and many of their suppliers were rampant. Probably insurmountable within the framework of the prevailing workplace culture, it was alleged, these practices were also unlikely to be addressed under new ownership.

Yet Proton is under new ownership now, since the Malaysian government sold its interest in the company to DRB-Hicom in April. And in another plot twist, the new parent company has moved swiftly to investigate Lotus boss Dany Bahar, Lotus having been bought by Proton back in 1996.

But Mr Startari remains upbeat about the importer's prospects in Australia. Speaking with motoring.com.au this week, the Proton boss offered his take on the company's forward plans in the local market. To start with, Proton will introduce two new models in Australia before the end of 2012.

"[Exora] is a people-mover due out later this year and the Preve is the sedan, which we will bring in as a replacement for the Persona Elegance," Mr Startari explained.

The Free Trade Agreement (FTA) between Australia and Malaysia won't affect the timing of those vehicles, Mr Startari says, since the FTA doesn't take effect until January 2013. Before then it will be "business as usual". The Preve is due in October and will be launched at the Australian International Motor Show in Sydney, while the Exora (pictured) will arrive one month earlier (September).

Both cars are likely to offer strong value through standard equipment and pricing — something unlikely to change with the lifting of the passenger vehicle import duty following the introduction of the FTA. According to Mr Startari, Proton will pass on the savings from the FTA to the customer.

"More than likely we'll up-spec to the value of the saving," he said. That's in line with Proton's local strategy to move upmarket from its current position.

Back in 2009, Mr Startari told motoring.com.au that the brand was heading into budget-buy territory to build sales volumes. Three years on, that strategy has been tossed in favour of a semi-premium product-led expansion program — understandable with Chinese brands beginning to set up in Australia.

"We're actually in a process of moving up, in terms of our specifications and safety ratings," Mr Startari explained. "So in that regard we won't be taking on the Chinese at price points; we're going to focus on a value-for-money proposition.

"The encouraging thing for us is Proton has indicated its willingness, even before the takeover, to move to more global platforms — and the first of those cars come in later this year. So you'll see big changes in the specifications offered in the cars, going forward. They'll be built to global standards and that makes it a lot easier for us to spec up the vehicles."

The impact the FTA will have on the importer's profitability and competitiveness will be minimal, it seems. Perhaps when the imported passenger vehicle tariff was around 25 per cent it might have left its mark, but not now.

According to Mr Startari, the lifting of the five per cent tariff is helpful, but the true benefit from the FTA is the reduction in time waiting for cars to be delivered.

"From January next year, Proton will be able to bring cars in and won't have to pay the five per cent duty — and that's something that's been afforded to many Honda models and a lot of light commercial models that come out of Thailand...

"But on top of that it also will save a lot of time in the preparation of vehicles, because vehicles are held in bond — and that requires lodgement with Customs. The vehicles have been brought in but the bond hasn't been paid. It [the imported vehicle] has to stay in a special yard until such time as the duty is paid."

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